According to a Las Vegas Valley real estate agent, there are two buzzwords in retail real estate.
“’Competitive Socialization’ is a big part of experiential retail,” said Areeba Moten, senior associate at Colliers International and moderator of the Southern Nevada chapter of the NAIOP panel on experiential retail held at the Orleans Thursday. “Basically, the concept of going out with friends to eat and drink, but also to play hatchet throwing, putt putt golf or darts, like they do now at Venetian.”
Experiential retail, a loosely defined term that encompasses everything from movie theaters and Top Golf to video arcades and pop-up stores, has reached its peak post-pandemic as consumers seek to get out of the house and interact more with your local community and your networks of in-person friends. Also known as “shoptainment,” the sector experienced tremendous growth last year relative to shopping malls, as a McGraw Hill Education study found an uptick in foot traffic across the United States.
Frank Volk, Executive Vice President of CBRE Group Inc, says the idea is simple: people no longer want to limit themselves to dining out and/or drinks, their expectations have changed dramatically since COVID-19, and human interaction needs to be more “immersive”.
“It’s really about taking an activity, maybe enhancing it with technology, bringing it with hospitality, food and drink and creating an extended stay, so you’re going to spend more money,” he said on the panel.
The Las Vegas retail scene is at a precarious time, as a second quarter report from Colliers International shows that demand for retail space is slowing and new supply in the city has been declining since the third quarter of 2022. The most active sectors in the leasing of commercial spaces in the last four quarters were food and beverages (18.4 percent), miscellaneous retail (16.1 percent), clothing and clothing (10 percent), services of health (8.7 percent) and personal services such as hair and nail salons (7.4 percent), the report shows. Traditional sectors such as home furnishings, general merchandise, construction/garden, and electronics experienced negative growth during this period.
Area 15 Expansion
One of the biggest hits in Las Vegas experiential retail is Area15, an immersive arts and entertainment center just west of Interstate 15 and Resorts World Las Vegas. The project was considered groundbreaking when it opened in 2020, and is now being expanded by a further 20 acres as locals and tourists flock to the site daily.
Michael Casper, Vice President of Business Development for Area15, who also participated in the panel discussion, said consumers want even more now, as one experience per outlet is not enough.
“Critical mass is important, and one of the things we have focused on the most is offering many different experiences in one place, because we have realized that people like to do two or three things at the same time. “, he claimed.
One of the biggest commercial projects this year is the Durango casino-resort on South Durango Drive, which will feature 200 hotel rooms, convention and meeting space, a pool, outdoor social areas and free parking. The $780 million project will be the only unrestricted gaming facility within a five-mile radius and is located in one of the fastest growing areas of the Las Vegas Valley.
Durango-owned Station Casinos is betting big on a suburban location, according to Randy Aguilar, the company’s director of leasing. Aguilar said that casinos are the original “experience,” and that Durango is building on a new model and not just building casinos as “slots.”
A less cramped location than the Strip offers gives Durango the potential to expand in the future, however, he noted that the new normal is expensive in 2023. CBRE estimates commercial building construction costs could return to pre-pandemic levels sometime next year (they finished 2022 more than 14 percent higher than 2021), however, the market remains susceptible to volatility due to a number of macro factors.
“The biggest problem is building these things,” he said. “The costs now are unbelievable, just before we built Durango, everything doubled, the cost of steel, the cost of lumber, but that’s the cost of doing business now and you just have to figure it out.”
